Lifting the Offer: Bitcoin trading analysis for the week of July 13th, 2015

Lifting-the-Offer--Week-of-07.13.2015

The bitcoin market is certainly heating up with the weather. The past two weeks have been remarkable with the price rising over 15% and industry volumes (as tracked by the XBX Index) hitting a four-month high. The events in Greece and China have been key drivers of the bitcoin price and traders should continue to keep a close eye on the situations in both countries. 

 

Tradeblock-07.13.2015

Source: tradeblock.com

Bitcoin By The Numbers

Bitcoin-Price-and-Martket-Cap-07.13.2015

Best Bits from Last Week

 

Bitcoin Price Recap

The rapid changes in price over the past week are reflected in the increased volatility in the market which has picked up since hitting 2015 lows in early June (see chart below). To put this in perspective, the average difference between intra-day highs and lows over the past two weeks was nearly 5% compared to 2.6% over the previous two weeks. The wildest swing in the market came last Friday morning (7/10) when there was a roughly $90 difference between the Asian and US exchanges with the bitcoin price reaching $375 in Asia.

itBit-Bitcoin-Price-vs-Volatility

The decline in trading volume, prices and leverage (risk) put on by traders in the Shanghai Composite and the economic uncertainty in Greece have been widely speculated to be key drivers of the bitcoin price. A prime example is the agreement reached between Greece and the EU on a third bailout which was followed by a 10% drop in the bitcoin price.

Also noteworthy are the correlations between the bitcoin and litecoin markets. The litecoin market alone was up nearly 72% from Monday to Friday and is now down 95% from Friday to today. The bottom line is that bitcoin is no longer an uncorrelated asset class, but is now closely linked to traditional economic events and other digital currencies.

 

Bitcoin Trading Week Ahead

Looking ahead, traders can expect a more subdued and stable market this week post-Greek bailout. It should take traders a few days to digest the latest price movements in the bitcoin market as well as the finer details outlined in the latest Greek bailout plan.

Given how strongly the bitcoin market has reacted to events in Greece recently, traders should keep an eye on whether the bailout agreement between Greece and the EU is formally executed this week.

 

This Week in Bitcoin’s (Limited) History

2013: WSJ: Bitcoin Downloads Surge in Argentina

2014: TIME: New York Proposes Bitcoin Regulations

 

Released every Monday, Lifting the Offer provides market and price analysis to prepare bitcoin traders for the week ahead. Check out the full LTO archive.

 

Bobby Cho is the Director of the Institutional Client Group at itBit. Previously, Bobby was Vice President of Trading at SecondMarket specializing in trading bitcoin and illiquid asset-backed securities. Comments? Feedback? Shoot Bobby an email.

 

*All data and references are current as of 9:00AM EST on 6/22/2015.
Lifting the Offer Legal Disclaimer